The Annual Industry Data Survey of the Health and Fitness Club Industry

Transcription

1 2007 The IHRSA PROFILES OF SUCCESS The Annual Industry Data Survey of the Health and Fitness Club Industry Compiled by The International Health, Racquet & Sportsclub Association, and Industry Insights, Inc.

2 IHRSA s Industry Data Survey of the Health and Fitness Club Industry Compiled by The International Health, Racquet & Sportsclub Association, and Industry Insights, Inc. International Health, Racquet & Sportsclub Association 263 Summer Street Boston, MA fax (U.S. & Canada) Copyright 2007 International Health, Racquet & Sportsclub Association All rights reserved. No part of this report may be reprinted, reproduced, stored in a retrieval system, or transmitted in any form or by any means electronic, mechanical, or otherwise without the express written consent of IHRSA. The International Health, Racquet & Sportsclub Association is a non-profit trade organization serving the commercial club industry. To order copies of this report or other IHRSA publications, visit

3 CONTENTS INTRODUCTION 3 METHODOLOGY 4 Data Treatment Survey Sample Characteristics INDUSTRY AT A GLANCE 6 U.S. Health, Racquet, and Sportsclubs U.S. Health Club Membership U.S. Health Club Patronage U.S. Health Club Core Members U.S. Health Club Industry Revenue U.S. Health Club Member Market Share CLUB MEMBER DEMOGRAPHICS 9 Gender Age Annual Household Income Region State City CLUB GROWTH BY REGION 15 CLUB PARTICIPATION BY EQUIPMENT AND GROUP EXERCISE 17 CLUB OPERATING BENCHMARKS 18 Five-Year Trend Data Club Type Club Size CLUB MEMBERSHIP GROWTH & TRAFFIC 21 Club Type Club Size CLUB PRICES 23 Club Type Club Size Increases and Discounting Practices CLUB MEMBERSHIP AGREEMENTS 28 CLUB PAYROLL AND STAFFING 29 Club Type Club Size Revenue per Full-Time Equivalents Staff Sizes by Club Type and Size CLUB FACILITIES AND PROGRAMMING 32 Facility Reinvestment Expansion of Facilities Most Commonly offered Facilities Most Commonly offered Programs Real Estate Rent Club Size 2006 INCOME STATEMENT, BALANCE SHEET DATA, AND PROFITABILITY RATIOS 39

4 ACKNOWLEDGEMENTS William C. Howland, Jr., Principal, OTM Consulting, who served as project manager for the report, performed data analysis, and wrote this report. Greg Manns, Vice President of Industry Insights, Inc. who supervised survey development, survey execution, data management, data analysis, and contributed to this report. Richard M. Caro, Jr., President of Management Vision, Inc., who provided advice on the project. Jay Ablondi, IHRSA Vice President of Publishing Phoebe Anderson, IHRSA Publications Coordinator Kristen Walsh, IHRSA Content Editor TPG Creative, which developed the design and layout of this report. In particular, the 129 IHRSA members who contributed their time and effort in order to complete the 2007 Industry Data Survey.

5 2007 The IHRSA PROFILES OF SUCCESS The following report represents the 26th edition of IHRSA s annual Industry Data Survey (IDS) and the accompanying publication, Profiles of Success. The commercial club industry in Canada and the United States has experienced dramatic growth and changes during this twenty-six year span, and as this report will bear out, the industry continues to grow and evolve today. A CHANGING AND GROWING MEMBERSHIP: Following a period of relatively stable membership numbers in the early 1990s, total U.S. health club membership has risen a robust 63% from just 26.2 million members in 1996 to nearly 43 million today. Aging Americans interested in maintaining their health, the decrease in funding for school Physical Education programs forcing parents to search for alternative play/exercise options for their children, and an increasing variety of quality clubs, along with other factors, have contributed to fuel this growth in consumer demand. Today, Americans over the age of 35 account for nearly 60% of all U.S. members, with the number of members over the age of 55 growing by a phenomenal 339% to just over 8.5 million, since Data from the most recent edition of the IHRSA/American Sports Data Health Club Trend Report also suggests that the industry continues to attract new customers through the door, with 41% of members indicating that they were first-time club members in The club industry also stands to benefit as the first wave of the more than 70 million members of the Echo Boom generation born between 1982 and 1994 enter the full-time workforce, representing an enormous potential new market for clubs over the next five to ten years. While the positive trends in the industry s historical growth and broader market demographics bode well for the future, the rate of total U.S. health club membership growth has slowed in the last few years. After remaining steady at approximately 41.3 million members in 2004 and 2005, membership grew by slightly more than 3% in CLUB PERFORMANCE REMAINS SOLID IN AN INCREASINGLY COMPETITIVE INDUSTRY: Reacting to the healthy growth in consumer demand that the industry began to experience in the late 1990s, new club development accelerated dramatically as established club companies and new entrants opened facilities throughout Canada and the U.S. In the U.S., the industry saw the total number of facilities grow by 124%, from approximately 13,097 facilities in 1997 to 29,357 clubs in January of While companies across a broad range of business models opened new facilities, club development during this period was overwhelmingly dominated by the growth in the number of small, express workout centers like Curves, with over 7,800 facilities in the U.S. alone, which may account for more than half of the industry s new facilities. As such, the industry has seen a dramatic increase in the actual number of clubs during the last decade, but in many cases, these new clubs and studios often are no more than 1,000 to 2,000 square feet in size and serve fewer than 200 to 300 members. In the face of this growth, the industry s increasingly sophisticated operators have developed distinct business models, e.g., women-only facilities, family clubs, or small studios, that target a particular segment of the consumer marketplace. The result of this evolution is that, especially in particular markets, the independent health club operator may now find his or her local market home to several small, franchised express centers, as well as facilities from large, professionally run companies like Life Time Fitness, Town Sports International, or 24 Hour Fitness, with each catering to slightly different segments of the local membership market. Recently, the torrid pace of club development appears to have slowed, with growth in the total number of U.S. facilities falling from just over 14% in 2004 and slightly more than 8% in 2005 to approximately 1% in This suggests that the industry may have begun to adjust to the slightly slower rate of growth in consumer demand, while weaker competitors have begun to exit the market. In spite of these shifting competitive dynamics, the clubs profiled by this study reported solid revenue and membership growth, along with improved profitability in 2006, providing clear evidence of the club industry s continued health. In particular, the 129 companies polled reported median revenue growth of 5.4% and 4.2% net membership growth over their 2005 performance. What s more, clubs across all categories reported improved profitability, with the typical company surveyed reporting that pre-tax earnings improved by better than three percentage points to 11.3% of revenues in This study also found particularly encouraging improvements in both the rate of member retention, a key indicator of potential softness in consumer demand, reported by clubs, as well as the revenue per individual member generated in The typical club participating in this year s survey reported member retention rising from 70.7% in 2005 to 73.3% in The study also found that median revenue per member improved by 5.5% to $741.80, providing evidence that clubs maintained their price points and avoided deep discounting in order to attract new members in A still evolving industry In the 1980s, the club industry in Canada and the U.S. experienced a dramatic shift as consumers traded their tennis and racquetball racquets for fitness related activities. In reaction, clubs in both countries converted massive amounts of court space to weight rooms, and group exercise studios, among other functions. Today, the sheer number and variety of business models has reshaped the industry again, but as in the 1980s, savvy operators continue to adapt and refine the products and services they offer, staying in step with the broader consumer market. IHRSA Profiles of Success

6 METHODOLOGY This 2007 Profiles of Success report is the result of a joint effort between the International Health, Racquet & Sportsclub Association (IHRSA) and Industry Insights, Inc. This study is based upon a detailed survey of 129 IHRSA member clubs representing 883 facilities in the United States and Canada. Unless otherwise noted, data reflects the median value for each individual set of responses to a question. The median represents the mid-point for a given data set, with one-half of the responses above it and one-half below. Unlike the mean, the arithmetical average, the median will not be skewed or distorted by a small number of unusually high or low values that may exist in the sample due to unique circumstances. Each median and mean was independently calculated or identified for each individual set or subset of responses to a given question. As a result, component figures on an item may not necessarily total 100% and normal mathematical relationships may not always exist. A useful feature in the 2007 edition of Profiles of Success is the presentation of a Middle Range for data on particular variables. The Middle Range consists of the middle 50% of the reported values that did not fall within the lower quartile, the value for the club that is one-quarter from the lowest value, and the upper quartile, the value for the club that is one-quarter from the highest value. The data and findings contained within Profiles of Success do not represent an absolute standard for an individual company s performance. Instead, the report is intended to provide a perspective on how a commercial health or sports club might behave as a business. The North American health club industry remains very entrepreneurial and, while an individual business that deviates dramatically on particular benchmarks might wish to investigate the possible cause for such a variance in its performance, local market conditions or a club s unique business model may account for such differences. In order to facilitate the consistent comparison of financial data, questions were adapted to conform to the recently published Uniform System of Accounts for the Health, Racquet and Sportsclub Industry. Data attributed to American Sports Data was published in the IHRSA/ American Sports Data Health Club Trend Report, which is sponsored by IHRSA. This data is derived from a survey of over 14,000 U.S. households, and represents demographic findings for Americans over the age of six. ABOUT INDUSTRY INSIGHTS, INC. Based in Columbus, OH, Industry Insights has been in business since 1980 and specializes in conducting industry performance research for industry trade associations and professional organizations. For the purposes of this study, Industry Insights consulted on survey development, and managed returned surveys, data entry, Smallest Number Reported Lower 25% of Reported Figures Lower Figure Typical Upper Figure Middle 50% of Reported Figures (or Middle Range) Largest Number Reported Upper 25% of Reported Figures Median 4 IHRSA Profiles of Success 2007

7 INDUSTRY DATA SURVEY Sample Characteristics SAMPLE CHARACTERISTICS AND DEFINITION OF CLUB TYPES Club Type Company Type A total of 129 IHRSA member companies completed the comprehensive Industry Data Survey (IDS) on which this report is based. They came from the following categories: 60% 40% 60% 40% Multipurpose (60% of respondents): These clubs have fitness facilities either an aerobics/dance exercise studio, and/or fitness center and racquet sport courts. They may, or may not, have additional facilities, such as a gymnasium, swimming pool, etc. Fitness-only (40% of respondents): These clubs have fitness facilities either an aerobics/dance exercise studio, and/or fitness center but they do not have racquet sport courts. They may, or may not, have additional facilities, such as a gymnasium, swimming pool, etc. Multiple Operations (40% of respondents): These clubs may be multipurpose, fitness-only, or tennis-only clubs, but they share a common ownership or management with at least one other club. Club Size 10% Multipurpose Clubs Fitness-only Clubs 16% 31% 43% Individual Facility Multi-club Operation Less than 20,000 sq. ft. 20,000 to 34,999 sq. ft. 35,000 to 59,999 sq. ft. 60,000 sq. ft. or more Multi-club Company Growth (Average number of clubs per company) Year No. of Clubs IHRSA Profiles of Success

8 INDUSTRY AT A GLANCE U.S. Health, Racquet, & Sports Clubs The phenomenal growth the U.S. commercial health club industry has demonstrated during the past decade appears to have moderated in the last few years. 16,983 17,807 20,207 23,500 26,830 29,069 29,357 The total number of fitness centers in the U.S. remained basically stable in 2006 at 29,357 facilities. U.S. health club membership continued to grow, albeit more slowly, reaching a record 42.7 million Americans in Over the past five years, total U.S. health club membership has increased an impressive 17.6%. 9,222 13,854 12, Source: InfoUSA, Inc. Note: Figures reflect the number of businesses listed in Yellow Page directories under industry SIC code U.S. Club Membership (millions) Source: IHRSA/American Sports Data Health Club Trend Report Note: Survey results represent membership numbers for a broad range of facilities, including park & recreation centers, hospital fitness centers, YMCAs, college & university centers, and commercial clubs. 6 IHRSA Profiles of Success 2007

9 INDUSTRY AT A GLANCE Health club utilization continues to signal a healthy demand for the industry and its services. A total of 26.6 million Americans who were non-members of clubs indicated that they visited a health club in The number of core health club users has increased by 19% in the last five years. Americans continue to visit their health clubs an average of 90 days per year. U.S. Health Club Patronage (millions) Source: IHRSA/American Sports Data Health Club Trend Report Year Growth Health Club Members % Non-member Patrons % Total % Note: Survey results represent membership numbers for a broad range of facilities, including park & recreation centers, hospital fitness centers, YMCAs, college & university centers, and commercial clubs. Health Club Attendance (Average number of days per year) Source: IHRSA/American Sports Data Health Club Trend Report. Growth in the Number of Core Members (Members who used the club 100+ days per year, in millions) Source: IHRSA/American Sports Data Health Club Trend Report. IHRSA Profiles of Success

10 INDUSTRY AT A GLANCE U.S. Health Club Industry Revenue (billions) $11.6 $12.2 $13.1 $14.1 $14.8 $15.9 $17.6 Total U.S. health club industry revenues reflects the industry s steady growth over the past decade. A 45% increase in the total number of U.S. health clubs since 2002 has fueled industry revenue growth. $6.5 $ Source: IHRSA Estimates. Commercial Club and Miscellaneous For-Profit Club Market Share: Percentage of total U.S. health club membership Continued consumer demand, combined with operators ability to maintain and even increase prices, have certainly contributed to industry revenue growth. 50% 16% 34% Commercial Not-for-profit Miscellaneous Commercial Source: IHRSA/American Sports Data Health Club Trend Report. 8 IHRSA Profiles of Success 2007

11 CLUB MEMBER DEMOGRAPHICS by Gender Club Membership by Gender 2006 Women Men 47% 53% American women represent a slight majority of all U.S. health club members. The total number of women who belong to clubs in the U.S. has grown by more than 118% since The total number of men who belong to clubs in the U.S. has grown by approximately 94% since Source: IHRSA/American Sports Data Health Club Trend Report. Club Membership by Gender (millions) Source: IHRSA/American Sports Data Health Club Trend Report. Women Men IHRSA Profiles of Success

12 CLUB MEMBER DEMOGRAPHICS by Age Club Membership by Age % 10% 31% Under % U.S. health clubs continue to attract members of all ages. The number of members over the age of 55 has grown a phenomenal 339% since Parents continue to enroll their children in clubs, with the number of members between the ages of 6 and 17 increasing by 125% since Contrary to popular stereotypes that portray health clubs as catering to a young and ultra fit client, nearly 60% of all U.S. club members are now over the age of 35. Source: IHRSA/American Sports Data Health Club Trend Report. Health Club Membership by Age (millions) Source: IHRSA/American Sports Data Health Club Trend Report. Under IHRSA Profiles of Success 2007

13 CLUB MEMBER DEMOGRAPHICS by Income Club Membership by Annual Household Income 9% 15% 19% 17% 40% Less than $25,000 $25,000 $49,999 $50,000 $74,999 $75,000 $99,999 $100,000+ U.S. health club members generally reflect a more affluent demographic. 40% of all members have annual household incomes in excess of $100,000. Slightly more than 15% of Americans with annual household incomes between $50,000 and $74,999 belong to a health club. Interestingly, Americans with annual household incomes between $25,000 and $49,999 proved to be the most active health club members, averaging 96 days of attendance in Source: IHRSA/American Sports Data Health Club Trend Report. Club Membership by Annual Household Income (millions) Source: IHRSA/American Sports Data Health Club Trend Report. Less than $25,000 $25,000 $49,999 $50,000 $74,999 $75, ,000+ (2006 only) IHRSA Profiles of Success

14 CLUB MEMBER DEMOGRAPHICS by Region Club Membership by Region 23% 37% 17% 24% West South North Central Northeast Regional increases in health club membership: The North Central section of the U.S. boasts the greatest rate of club membership at just over 17% of the population. The South accounts for the largest percentage (36.5%) of all U.S. members and a 142% rate of growth in total membership since Source: IHRSA/American Sports Data Health Club Trend Report. Club Membership by Region (millions) Source: IHRSA/American Sports Data Health Club Trend Report. West South North Central Northeast 12 IHRSA Profiles of Success 2007

15 CLUB MEMBER DEMOGRAPHICS by State Club Membership by State The top five states with the greatest percentage of population belonging to a health club include: Connecticut Massachusetts Colorado New Mexico Maryland Source: IHRSA/American Sports Data Health Club Trend Report. Note: Data reflects an average over a three-year period; Connecticut 22.7% Massachusetts 21% Colorado 20.3% New Mexico 20.3% Maryland 19.6% Kansas 19% Ohio 18.6% Oregon 18.5% California 18.4% Rhode Island 18.1% North Carolina 18.1% Georgia 17.7% Virginia 17.5% Delaware 17.5% Minnesota 16.8% Iowa 16.6% Wisconsin 16.5% Vermont 16.4% Washington 16% New Hampshire 16% Tennessee 15.7% Michigan 15.6% Illinois 15.3% South Dakota 15.2% Missouri 15.2% Kentucky 15.1% Arizona 15.1% Utah 15% Florida 14.8% New Jersey 14.7% Arkansas 14.6% Texas 14.4% New York 14.4% Nevada 13.6% Pennsylvania 13.4% Nebraska 13.3% Indiana 13.1% Montana 12.4% Wyoming 11% Maine 10.7% Louisiana 10.6% South Carolina 10.3% Oklahoma 9.5% Mississippi 9.2% North Dakota 8.8% Alabama 8.7% Idaho 8.5% West Virginia 5.9% IHRSA Profiles of Success

16 CLUB MEMBER DEMOGRAPHICS by City The top five cities with the greatest percentage of population belonging to a health club include: Milwaukee Denver St. Louis Miami San Antonio Club Membership by City Milwaukee 24.7% Denver 23.8% St. Louis 23.3% Miami 22.8% San Antonio 22.6% Columbus 22.3% Atlanta 22.2% Cincinnati 21.7% San Diego 21.5% Boston 21.1% Portland 20.8% Los Angeles 20.5% Minneapolis 20.5% Norfolk 20.2% Kansas City 19.5% San Francisco 19.4% Washington 19.2% Seattle 18.0% Detroit 17.3% Dallas 16.9% Chicago 16.8% Philadelphia 16.7% Tampa 16.4% Houston 16.4% New York 16.2% Indianapolis 15.7% Cleveland 15.5% New Orleans 14.8% Orlando 14.3% Sacramento 13.8% Phoenix 12.2% Pittsburgh 11.6% Las Vegas 10.8% Source: IHRSA/American Sports Data Health Club Trend Report. Note: Data reflects an average over a three-year period; IHRSA Profiles of Success 2007

17 CLUB GROWTH by Region Club Growth by Region * % Change North East Total 3,137 3,971 4,020 4,085 4,969 5,905 6,287 6,362 6,184 97% East Connecticut % Maine % Massachusetts % New Hampshire % Rhode Island % Vermont % Total 1,028 1,208 1,257 1,275 1,638 1,911 1,994 2,010 1,921 87% Middle Atlantic New Jersey ,002 1,058 1,045 1, % New York 954 1,235 1,247 1,254 1,517 1,770 1,842 1,933 1,902 99% Pennsylvania ,002 1,222 1,393 1,374 1,334 98% Total 2,109 2,763 2,763 2,810 3,331 3,994 4,293 4,352 4, % South Total 4,631 6,289 6,341 6,370 7,214 8,482 9,435 9,838 10, % South Atlantic Delaware % Washington, D.C % Maryland % Virginia % West Virginia % Florida 860 1,109 1,105 1,114 1,309 1,520 1,691 1,752 1, % Georgia % North Carolina % South Carolina % Total 2,460 3,352 3,391 3,394 3,957 4,705 5,241 5,416 5, % East South Central Alabama % Kentucky % Mississippi % Tennessee % Total ,058 1,212 1,371 1,406 1, % West South Central Louisiana % Arkansas % Oklahoma % Texas 913 1,200 1,216 1,253 1,438 1,694 1,860 1,986 1, % Total 1,486 1,951 1,989 2,023 2,199 2,565 2,823 3,016 3, % * as of September 2007 Source: InfoUSA, Inc.; Figures reflect the number of businesses listed in Yellow Page directories under industry SIC code Note: Bolded reflect Top 10 states in terms of club growth. IHRSA Profiles of Success

18 CLUB GROWTH by Region Club Growth by Region (continued) * % growth North-Central Total 2,530 3,404 3,240 3,564 4,822 5,744 6,260 6,520 6, % East North Central Illinois ,073 1,183 1,209 1, % Indiana % Michigan % Ohio % Wisconsin % Total 1,749 2,354 2,134 2,382 3,271 3,897 4,208 4,265 4, % West North Central Iowa % Kansas % Minnesota % Missouri % Nebraska % North Dakota % South Dakota % Total 781 1,050 1,106 1,182 1,551 1,847 2,052 2,255 2, % West Total 2,801 3,857 3,927 4,084 5,026 5,917 6,467 6,616 6, % Mountain Arizona % Colorado % Idaho % Montana % New Mexico % Nevada % Utah % Wyoming % Total 794 1,226 1,241 1,282 1,535 1,749 1,969 2,032 2, % Pacific Alaska % California 1,421 1,873 1,909 1,999 2,500 3,008 3,281 3,295 3, % Hawaii % Oregon % Washington % Total 2,007 2,631 2,686 2,802 3,491 4,168 4,498 4,584 4, % * as of September 2007 Source: InfoUSA, Inc.; Figures reflect the number of businesses listed in Yellow Page directories under industry SIC code Note: Bolded reflect Top 10 states in terms of club growth. 16 IHRSA Profiles of Success 2007

19 CLUB PARTICIPATION by Equipment and Group Exercise Activity Participation (millions) Club Participation: Elliptical trainers continue to grow in popularity, with 7.6 million health club users in 2006, reflecting a 43% increase since Treadmills still represent the most popular piece of cardio equipment with 12.2 million users. Training with resistance equipment in clubs remains the most popular single activity, with some 14.3 million users in 2006, reflecting a 25% increase since Resistance Machines 14.3 Treadmills 12.2 Free Weights 11.3 Stationary Bikes (net) 7.9 Abdominal Machines 7.7 Elliptical Trainers 7.6 Stair-climbers 4.9 Recumbent Cycling 2.9 Yoga 2.5 Swimming (laps) 2.2 Rowing Machines 2.2 Group Cycling 1.6 Pilates Training 1.5 Aerobics (low impact) 1.4 Aerobics (Step) 1.4 Nordic Ski Machine 1.3 Cardio Kickboxing 1.2 Aquatic Exercise 1.2 Racquetball 1.1 Aerobics (regular) 1.0 Tennis 0.3 Source: IHRSA/American Sports Data Health Club Trend Report. IHRSA Profiles of Success

20 CLUB OPERATING BENCHMARKS Five-Year Trend Five-Year Trend: A small sub-set of the study sample has participated in the IDS for the past five years. The shifting composition of this sub-set of club companies does present the potential for some anomalous findings, but, in general, the results appear fairly consistent over time. At the most basic level, these companies reported positive revenue growth over the past five years, reporting 4% or better increases in revenue for three out of five years. Member retention remained steady and within a narrow band between about 68% and 70%. While profits did fluctuate some, these companies did report positive pre-tax earnings of at least 6.4% of revenues in each of the last five years. Five-Year Trend Total Revenue (thousands) EBITDA as % of Revenue Pre-tax earnings as % of Revenue All Clubs $3,604 $2,938 $2,851 $3,305 $3, % 21.1% 15.2% 20.0% 22.0% 7.3% 12.3% 6.7% 6.4% 9.4% Revenue Growth 4.3% 4.1% 3.3% 4.0% 1.8% Total Payroll as % of Revenue Rate of Member Retention Net Membership Growth Revenue per Individual Member Indoor Square Foot per Individual Member Revenue per Indoor Square Foot Non-dues Revenue as % of Revenue 44.3% 43.6% 43.4% 44.8% 43.5% 69.7% 70.3% 68.7% 69.1% 67.8% 0.7% 4.0% 1.0% 1.9% 0.4% $ $ $ $ $ $59.59 $51.81 $49.94 $45.81 $ % 29.7% 30.4% 28.2% 28.6% Note: This table is based on data from the 2003, 2004, 2005, 2006, and 2007 Industry Data Surveys, and on the responses from the 28 companies that participated in all five years of the study. Benchmark Data Definitions: EBITDA Earnings before interest, taxes, depreciation, and amortization. Pretax Earnings Earnings before income taxes. 18 IHRSA Profiles of Success 2007

21 CLUB OPERATING BENCHMARKS by Club Type Benchmarks by Club Type (medians) All Clubs Multipurpose Clubs Fitness-only Clubs Part of Chain or Multi-club Group Independent Total Revenue (thousands) $3, $3, $3, $4, $2, $2, $7, $7, $1, $1, EBITDA as % of Revenue 20.10% 19.90% 23.10% 17.90% 22.50% Pre-tax earnings as % of Revenue 7.70% 11.30% 7.30% 10.30% 9.50% 15.70% 11.80% 12.90% 6.80% 8.60% Non-dues Revenue as % of Revenue 29.00% 29.30% 19.80% 30.30% 29.00% Revenue Growth 5.40% 6.20% 4.80% 6.60% 5.20% Total Payroll as % of Revenue 44.50% 42.70% 44.10% 41.60% 44.60% 45.40% 39.30% 41.60% 44.70% 44.80% Rate of Member Retention 70.70% 73.30% 71.10% 74.20% 67.60% 70.90% 69.70% 72.50% 73.50% 74.80% Net Membership Growth 4.20% 4.80% 3.40% 5.60% 1.40% Revenue per Individual Member $ $ $ $ $ $ $ $1, $ $ Indoor Square Foot per Individual Member BENCHMARKS BY CLUB TYPE In spite of what some industry watchers consider has become an overly competitive industry, the businesses participating in IHRSA s annual IDS posted solid gains in In total, clubs responding to the survey reported 5.4% growth in total revenues and a 4.2% improvement in net membership over their 2005 numbers. The study found that these positive results held true across club categories, with clubs of all types reporting positive revenue and net membership growth in Clubs participating in the survey also reported an improvement in their ability to retain their existing members in Specifically, the median rate of retention increased by nearly three percentage points from 70.7% in 2005 to 73.3%, and, as with the revenue and membership growth numbers, the study found that retention improved for businesses across all club types in The fact that clubs of all kinds improved their respective rates of member retention is significant on several fronts. At the most fundamental level, a club s ability to attract and retain members is central to the business long-term viability. In particular, a stable membership base reduces a club s dependence on new membership sales to generate revenue growth. Instead, clubs with a stable membership base may focus on generating revenues from high-margin, internal profit centers, e.g., personal training programs, and an increased share of their members wallet. In fact, this year s study found that the typical club surveyed grew revenue per individual member by approximately 5.5% in 2006, to $ In terms of non-dues revenue, the typical club surveyed reported generating nearly one-third (32.1%) of total revenues from internal profit centers, providing evidence of the industry s ability to develop programs and services that meet consumers fitness and recreation needs. In a similar vein, this year s study found that clubs steady improvements in revenue growth, membership growth, and on the retention front contributed to an overall improvement in productivity and profitability. Specifically, the typical business responding to the survey reported a 6.6% increase in the revenue per square foot ($53.50), while club profitability for the entire sample improved by better than three percentage points to 11.3% (pre-tax earnings as a percentage of revenues) in 2006, reflecting club managers ability to control costs while generating overall growth. IHRSA Profiles of Success

22 CLUB OPERATING BENCHMARKS by Club Size Benchmarks by Club Size (medians) Clubs With Less Than 20,000 sq. ft.* Clubs Between 20,000 and 34,999 sq. ft.* Clubs Between 35,000 and 59,999 sq. ft. Clubs With 60,000 sq. ft. or More Total Revenue (thousands) $ $ $1, $1, $2, $2, $6, $6, EBITDA as % of Revenue 33.60% 18.40% 24.20% 18.00% Pre-tax earnings as % of Revenue 4.70% 22.10% 11.30% 10.60% 9.50% 14.30% 7.30% 9.00% Non-dues Revenue as % of Revenue 13.50% 25.80% 19.80% 32.00% Revenue Growth 3.60% 7.20% 5.50% 5.30% Total Payroll as % of Revenue 40.90% 44.30% 44.60% 45.40% 44.90% 40.70% 44.50% 42.70% Rate of Member Retention 68.50% 76.30% 70.10% 69.10% 65.70% 69.50% 73.50% 74.70% Net Membership Growth 5.40% -0.10% 5.90% 3.40% Revenue per Individual Member $ $ $ $ $ $ $ $1, Indoor Square Foot per Individual Member Revenue per Indoor Square Foot $36.70 $47.10 $59.00 $64.00 $50.20 $53.50 $53.50 $56.70 Note: *Indicates small sample size for a particular category, resulting in potentially anomalous results/findings. BENCHMARKS BY CLUB SIZE An examination of key club operating and financial benchmarks by club size similarly reflects an overall solid performance by the clubs surveyed. In particular, mid-sized to large clubs, i.e., clubs with 35,000 square feet of indoor space and larger, reported steady revenue growth at 5.3% or better, improved profitability in terms of pretax earnings, and an improved rate of member retention in Clubs of all sizes also reported increased revenue per square foot in 2006, a positive indicator of management s ability to improve an individual facility s productivity. The smallest clubs, clubs with less than 20,000 square feet of space, reported the most dramatic improvement, generating $47.10 per square foot (median), reflecting a 28% increase over Member retention rates also remained steady or improved for clubs of all sizes, providing indirect evidence of the diverse nature of the health club consumer marketplace. Consumer preferences obviously differ considerably, with some members preferring the benefits of large, multisport clubs that may cater to several thousand members, while others prefer the simplicity of smaller and more intimate clubs that serve a much smaller membership base. This diversity among consumers represents a significant dynamic for the industry-at-large, creating an opportunity for businesses to develop operating models that cater to specific segments or niches within the marketplace, e.g., women s-only vs. family oriented clubs. As such, a single, local market may often support several successful clubs within relatively close proximity. Benchmark Data Definitions: EBITDA Earnings before interest, taxes, depreciation, and amortization. Pretax Earnings Earnings before income taxes. 20 IHRSA Profiles of Success 2007

23 MEMBERSHIP GROWTH & TRAFFIC by Club Type NEW MEMBERSHIP GROWTH As has been previously noted, clubs responding to the survey reported steady 4.2% net membership growth over 2005 levels, with the typical club reporting 880 individual new members joining in Not surprisingly, the larger multipurpose clubs reported adding 1,040 individual new members in 2006 compared to the slightly smaller number of 740 members added by the typical fitness-only facility surveyed. Consistent with previous findings, multipurpose clubs indicated that they were more likely to sell multipleperson memberships, e.g., families, resulting in a ratio of 2:1 individual members per account, where fitness-only clubs reported a ratio of 1:5 individuals per membership account. CORPORATE MEMBERSHIPS Participating clubs also reported that they generated an average of 15.6% (8% median) of their new membership accounts from a corporate membership agreement or program, a level that has remained fairly consistent for the past several years. Clubs indicated that individuals who joined as part of a corporate membership agreement typically received a 50% discount on their initiation fee and a 10% savings on membership dues. All Clubs Membership Accounts Membership Individuals Median Middle Range Median Middle Range Memberships as of Jan. 1, , ,351 3,298 1,397 5,904 Added Memberships , ,620 Dropped Memberships ,354 Memberships as of Dec. 31, ,445 3,390 1,515 6,589 Multipurpose Clubs Membership Accounts Membership Individuals Median Middle Range Median Middle Range Memberships as of Jan. 1, ,568 1,353 3,677 4,528 2,138 7,621 Added Memberships ,337 1, ,140 Dropped Memberships , ,979 Memberships as of Dec. 31, ,674 1,441 3,760 5,567 2,312 7,705 Fitness-only Clubs Membership Accounts Membership Individuals Median Middle Range Median Middle Range Memberships as of Jan. 1, , ,394 2, ,348 Added Memberships ,258 Dropped Memberships ,020 Memberships as of Dec. 31, , ,859 2, ,815 Percentage of Daily Member Traffic During: Opening 11:00 AM 34.6% 11:01 AM 2:00 PM 14.5% 2:01 PM 4:30 PM 12.4% 4:31 PM 8:30 PM 31.4% 8:31 PM Closing 7.1% IHRSA Profiles of Success

24 MEMBERSHIP GROWTH & TRAFFIC by Club Size Guest Visits Participating clubs indicated that they received an average of 244,284 member visits in 2006 (150,796 median) and some 3,745 guest visits (2,185 median) during the year. Clubs With Less Than 20,000 sq.ft. Membership Accounts Membership Individuals Median Middle Range Median Middle Range Memberships as of Jan. 1, , ,353 Added Memberships Dropped Memberships Memberships as of Dec. 31, ,164 1, ,510 Clubs Between 20,000 and 34,999 sq. ft. Membership Accounts Membership Individuals Median Middle Range Median Middle Range Memberships as of Jan. 1, ,970 1,268 2,672 3,012 N/A Added Memberships ,049 1,015 N/A Dropped Memberships N/A Memberships as of Dec. 31, ,070 1,354 2,903 3,171 N/A Clubs Between 35,000 and 59,999 sq. ft. Membership Accounts Membership Individuals Median Middle Range Median Middle Range Memberships as of Jan. 1, ,342 1,399 2,843 3,611 2,625 4,232 Added Memberships , ,788 Dropped Memberships , ,255 Memberships as of Dec. 31, ,641 1,461 3,319 3,864 2,606 4,489 Clubs With 60,000 sq. ft. or More Membership Accounts Membership Individuals Median Middle Range Median Middle Range Memberships as of Jan. 1, ,158 2,007 4,430 5,273 2,597 7,661 Added Memberships ,430 1, ,900 Dropped Memberships ,285 1, ,998 Memberships as of Dec. 31, ,254 2,295 4,610 5,802 2,587 7, IHRSA Profiles of Success 2007

25 CLUB PRICES by Club Type All Clubs Enrollment/Initiation Fee Monthly Dues Median Middle Range Median Middle Range Regular Individual (single adult) $ $99.00 $ $54.00 $42.58 $84.00 Corporate Individual $99.00 $50.00 $ $48.50 $35.25 $78.00 Couple $ $ $ $87.00 $65.00 $ Family $ $ $ $ $74.98 $ Junior $99.00 $50.00 $ $39.00 $30.00 $47.50 Senior Citizen $ $69.00 $ $43.50 $33.33 $59.00 Multipurpose Clubs Enrollment/Initiation Fee Monthly Dues Median Middle Range Median Middle Range Regular Individual (single adult) $ $ $ $67.00 $49.48 $96.29 Corporate Individual $ $52.25 $ $55.00 $39.98 $84.25 Couple $ $ $ $99.00 $75.00 $ Family $ $ $ $ $89.00 $ Junior $ $75.00 $ $43.00 $36.04 $56.00 Senior Citizen $ $75.00 $ $49.00 $40.00 $65.50 Fitness-only Clubs Enrollment/Initiation Fee Monthly Dues Median Middle Range Median Middle Range Regular Individual (single adult) $99.00 $69.00 $ $43.50 $37.32 $54.75 Corporate Individual $75.00 $50.00 $ $34.16 $30.00 $49.50 Couple $ $78.51 $ $65.00 $57.00 $97.00 Family $ $71.75 $ $76.98 $62.25 $99.00 Junior $69.00 $49.00 $ $31.77 $28.12 $39.67 Senior Citizen $95.00 $50.00 $ $34.17 $30.00 $39.75 IHRSA Profiles of Success

26 CLUB PRICES by Club Size Clubs With Less Than 20,000 sq. ft. Enrollment/Initiation Fee Monthly Dues Median Middle Range Median Middle Range Regular Individual (single adult) $99.50 $66.97 $ $40.00 $35.25 $48.25 Corporate Individual $75.00 $50.00 $99.00 $33.12 $29.95 $40.00 Couple $ $77.63 $ $60.00 $55.43 $73.50 Family $ $71.75 $ $71.00 $57.48 $89.48 Junior $69.00 $59.00 $ $31.05 $28.62 $38.00 Senior Citizen $75.00 $49.50 $ $33.33 $30.00 $39.00 Clubs Between 20,000 and 34,999 sq. ft. Enrollment/Initiation Fee Monthly Dues Median Middle Range Median Middle Range Regular Individual (single adult) $99.00 $52.25 $ $52.00 $45.50 $58.75 Corporate Individual $49.00 $42.00 $ $39.00 $37.95 $44.00 Couple $ $50.00 $ $73.95 $65.00 $81.50 Family $79.50 $50.00 $ $78.95 $54.09 $88.00 Junior $62.50 $44.00 $ $41.50 $37.74 $47.37 Senior Citizen $99.00 $29.00 $ $39.00 $36.95 $ IHRSA Profiles of Success 2007

27 CLUB PRICES by Club Size Clubs Between 35,000 and 59,999 sq. ft. Enrollment/Initiation Fee Monthly Dues Median Middle Range Median Middle Range Regular Individual (single adult) $ $99.25 $ $54.00 $43.50 $66.00 Corporate Individual $96.00 $49.50 $ $43.00 $36.25 $55.75 Couple $ $ $ $86.48 $64.50 $99.00 Family $ $ $ $99.48 $82.75 $ Junior $99.00 $75.00 $ $41.50 $26.00 $46.00 Senior Citizen $99.00 $98.00 $ $44.00 $39.00 $50.00 Clubs With 60,000 sq. ft. or More Enrollment/Initiation Fee Monthly Dues Median Middle Range Median Middle Range Regular Individual (single adult) $ $ $ $80.50 $58.81 $ Corporate Individual $ $77.25 $ $71.11 $52.50 $89.75 Couple $ $ $ $ $91.50 $ Family $ $ $ $ $ $ Junior $ $73.75 $ $43.00 $35.61 $57.00 Senior Citizen $ $76.25 $ $56.00 $47.00 $90.00 IHRSA Profiles of Success

28 CLUB PRICES Increases and Discounting Prices On an extremely positive note for the industry, this year s study found that the overwhelming majority (97%) of clubs responding to the survey maintained or increased their prices relative to In fact, half of the clubs polled raised their membership dues prices by 4.0% (median) in 2006, while a slightly smaller percentage (48%) indicated that they raised usage fees for club programs and services. In spite of the fact that the majority of clubs maintained or increased their prices in 2006, this year s study confirmed that promotional discounts remain a staple membership sales tactic for the industry. In particular, over three-quarters (77%) of clubs responding to the IDS indicated that they offered a promotional discount on membership enrollment or initiation fees in 2006, with a majority (60%) offering an advertised discount three or more times during the year. Consistent with past editions of the study, most companies reported that they never advertised a discount on the cost of their membership dues, recognizing the future value of these recurring revenues. Instead, clubs reported that they typically advertised a 50% discount on enrollment or initiations fees, and that they offered these discounts for a period equivalent to half of the calendar year in While promotional discounts on club initiation fees are obviously here to stay in the club industry, the improved revenue per member figures reported by the clubs surveyed provides evidence of a disciplined application of promotional discounts. Percentage of Clubs that Discounted Fees in 2006 Results from this year s study indicate that the typical club generated approximately 28% of total new memberships in 2006 from a discount offer or promotion. Number of times per year Enrollment Fees Membership Dues Never 23% 72% % 9% % 11% % 4% 7+ 25% 4% Number of Memberships Attributable to a Discount Offer (not including corporate membership) Lower 25% Median Upper 25% All Multipurpose Clubs Fitness-only Clubs Less than 20,000 sq ft ,000 to 34,999 sq ft ,000 to 59,999 sq ft ,000 sq ft or more IHRSA Profiles of Success 2007

29 CLUB PRICES Increases and Discounting Practices In any competitive industry, companies adopt different approaches to their respective markets as a means to differentiate themselves from competitors. The club industry, like most others, possesses examples of companies that reflect a broad range of business models as well as price points. The positive news is that data from this year s survey suggests club companies everywhere along the spectrum of price succeeded in Specifically, club profitability, in terms of EBITDA, remained within a narrow band of 20% and 22% of total revenues, while companies across the price spectrum reported improved revenue growth over However, a club s pricing structure does appear to have a relationship to both net membership growth and total revenue per individual member. In particular, net membership growth reflected an inverse relationship with club pricing, with the lowest priced clubs, i.e., those charging $40 or less per month in dues, reporting 13% growth (median), while the most expensive clubs, i.e., those charging $70 or more per month in dues, reported only a 1.4% improvement in membership growth over In all likelihood, this dynamic reflects the fact that more affordably priced clubs focus on succeeding as a low cost and higher volume business, while the more expensive clubs succeed by generating more revenue per individual member as a result of both their higher membership price point and revenues from non-dues related sources such as personal training, food & beverage, and other internal profit centers. Dues Prices vs. Profitability and Growth (medians) $40 per month or less $41 - $69 per month $70 per month or more EBITDA as % of Revenue 20.90% 22.00% 19.90% Revenue Growth (Current year vs. prior year) 3.50% 6.80% 5.10% Total Payroll as % of Revenue 45.10% 44.50% 42.70% Rate of Member Retention 63.60% 69.50% 75.80% Net Membership Growth (Current year vs. prior year) 13.00% 8.50% 1.40% Revenue per Individual Member $ $ $1, IHRSA Profiles of Success

30 CLUB MEMBERSHIP AGREEMENTS While clubs reported offering consumers a choice in membership plans in 2006, the overwhelming majority (85%) of U.S. and Canadian clubs sell a simple, month-to-month membership. Nearly half (49%) of the companies participating in the study indicated that they offered their members the option of a twelve-month agreement that automatically converts to a monthly membership plan after the first full year of membership. From the consumer s perspective, month-to-month membership plans clearly appear to be the most popular option, with clubs reporting that 49% of their members fall under such agreements. Clubs Offer Consumers a Choice of Membership Plans % of clubs offering % of accounts per plan Month-to-month 85% 49% 12-month agreement that converts to a monthly plan upon 13th month 49% 29% 12 months, renew as 12-month term 39% 15% Longer than 12-month agreement 23% 7% 28 IHRSA Profiles of Success 2007

31 CLUB PAYROLL AND STAFFING Employee compensation and benefits remain the single largest operating expense for club companies. Results from this year s study found that clubs across most categories and sizes experienced increases in total payroll expenses in In particular, clubs participating in the study indicated that total spending on payroll rose by 3% to $1.08M. Not surprisingly, the accelerating cost of providing employee benefits such as health insurance continues to affect the club industry, with the median figure reported by clubs rising 8% to $43,622. An examination of payroll spending by club size suggests that increasing payroll expenses may have been an even more severe problem for larger clubs in the U.S. and Canada, with companies, e.g., clubs over 60,000 square feet in size, reporting payroll growth as high as 10% in Interestingly, the apparent increases in compensation and benefits expense appears to be driven by inflationary factors, e.g., cost of living adjustments and/or competitive forces, rather than growing overall staff sizes. The study found that club staff sizes remained virtually unchanged from 2005 to 2006, with the median number of employees, as measured in full-time equivalents, holding steady at 30. The stable employee numbers definitely appears to be a consistent trend, with the number of full-time equivalents remaining virtually unchanged across club categories in While payroll costs did rise in 2006, clubs also reported improved levels of employee productivity. An examination of company revenue per employee found that clubs generated $94,800 per full-time equivalent, reflecting an 8.4% increase over Staff Size by Club Type and Club Size Full-time Part-time Full-time Equivalents Full-time Part-time Full-time Equivalents All Clubs Multipurpose Clubs Fitness-Only Clubs Less Than 20,000 sq. ft ,000 to 34,999 sq. ft ,000 to 59,999 sq. ft ,000 sq. ft. or More Revenue per Full-time Equivalent (000s) All Clubs $87.44 $94.80 Multipurpose Clubs $85.00 $94.60 Fitness-Only Clubs $94.26 $94.80 Less Than 20,000 sq. ft. $68.51 $ ,000 to 34,999 sq. ft. $97.00 $ ,000 to 59,999 sq. ft. $ $ ,000 sq. ft. or More $86.73 $95.05 IHRSA Profiles of Success

32 CLUB PAYROLL AND STAFFING by Club Type Club Payroll as a Percentage of Total Payroll All Clubs Payroll: Non-owners 78% 79% Payroll: Owners 7% 7% Employee Benefits 5% 5% Payroll Taxes 8% 8% Professional Development 2% 1% Total Payroll 100% 100% Club Payroll Spending (medians) % Change All Clubs Payroll: Non-owners $828, $902, % Payroll: Owners $27, $30, % Employee Benefits $40, $43, % Payroll Taxes $78, $80, % Professional Development $2, $3, % Total Payroll $1,051, $1,081, % Multipurpose Clubs Payroll: Non-owners $1,033, $1,130, % Payroll: Owners $27, $23, % Employee Benefits $60, $56, % Payroll Taxes $99, $107, % Professional Development $3, $5, % Total Payroll $1,382, $1,538, % Fitness-Only Clubs Payroll: Non-owners $290, $272, % Payroll: Owners $27, $30, % Employee Benefits $13, $8, % Payroll Taxes $38, $38, % Professional Development $1, $2, % Total Payroll $416, $421, % Multi-club Group Payroll: Non-owners $1,400, $1,453, % Payroll: Owners $63, $61, % Employee Benefits $73, $65, % Payroll Taxes $133, $147, % Professional Development $5, $5, % Total Payroll $1,644, $1,747, % 30 IHRSA Profiles of Success 2007

33 CLUB PAYROLL AND STAFFING by Club Size Club Payroll Spending (medians) % Change Clubs With Less Than 20,000 sq. ft. Payroll: Non-owners $120, $123, % Payroll: Owners $24, $28, % Employee Benefits $2, $3, % Payroll Taxes $15, $20, % Professional Development $1, $1, % Total Payroll $158, $171, % Clubs Between 20,000 and 34,999 sq. ft. Payroll: Non-owners $649, $755, % Payroll: Owners $40, $40, % Employee Benefits $37, $43, % Payroll Taxes $64, $76, % Professional Development $6, $10, % Total Payroll $926, $1,011, % Clubs Between 35,000 and 59,999 sq. ft. Payroll: Non-owners $695, $727, % Payroll: Owners $92, $77, % Employee Benefits $24, $20, % Payroll Taxes $78, $80, % Professional Development $3, $5, % Total Payroll $935, $925, % Clubs With 60,000 sq. ft. or More Payroll: Non-owners $1,877, $2,041, % Payroll: Owners Employee Benefits $95, $98, % Payroll Taxes $180, $179, % Professional Development $6, $8, % Total Payroll $2,278, $2,505, % IHRSA Profiles of Success

34 CLUB FACILITIES Facility Reinvestment While the Canadian and U.S. club industry certainly has its examples of individual clubs or club companies whose unique facilities represent a competitive advantage in their respective markets, for the majority of clubs, a clean and updated facility represents an order qualifier rather than a distinct advantage. In an industry with an increasingly sophisticated and discriminating consumer, i.e., some club members now have twenty or more years of health club experience, a well-maintained facility is critical to an individual club simply surviving in a competitive environment. Not surprisingly, the clubs participating in this year s study reported making significant investments in club maintenance in The typical club reported spending the equivalent of 5.2% of total revenues, or approximately $2.60 per square foot, to maintain and upgrade club facility & grounds, fitness equipment, and office technology. Reinvestment Spending by Category Median Middle Range Fitness Equipment $56,000 $21, ,0000 Office Equipment $8,000 $2,000 30,000 Facility & Grounds $70,000 $17, ,000 Total Reinvestment Dollars $200,000 $59, ,400 Note: Medians reflect the midpoint for each individual set or subset of responses to a given question. As a result, component figures on an item may not necessarily total 100 percent and normal mathematical relationships between items may not always exist. Reinvestment as a Percent of Revenue Median Middle Range Fitness Equipment 1.6% Office Equipment 0.4% Facility & Grounds 2.3% Total Reinvestment as a Percent of Revenue 5.2% IHRSA Profiles of Success 2007

35 CLUB FACILITIES Facility Reinvestment Consistent with past editions of the IDS, facility reinvestment appears to correlate with improved performance. Specifically, those clubs that invested the most in their facilities, spending approximately $7.70 (median) per square foot, reported higher rates of revenue growth, net membership growth, member retention, and operating profitability. In particular, clubs reporting the greatest levels of reinvestment (top quartile in terms of total reinvestment as a percentage of total revenues) reported EBITDA at 24.9% of revenues, outperforming the typical club surveyed (middle two quartiles) by approximately five percentage points and those clubs that spent the least (bottom quartile) by seven percentage points. These findings clearly suggest that clubs can generate healthy profits while maintaining high levels of continuing investment in their businesses. Club Reinvestment and Performance Top 25% Middle 50% Bottom 25% Reinvestment as a percent of total revenues 16.6% 5.2% 1.6% Revenue growth 7% 5.2% 5.1% Net membership growth 7.3% 3.3% 4.2% Member retention 77% 71.9% 57.2% EBITDA 24.9% 19.7% 18% Data Definitions: EBITDA Earnings before interest, taxes, depreciation, and amortization. IHRSA Profiles of Success

36 CLUB FACILITIES Expansion Shifting consumer preferences and advancements in club programs require top club operators to continuously evaluate and modify their facilities in order to provide the optimal product offering for their respective markets. While many clubs modified the internal layout of their facilities in 2006, e.g., 27% reported expanding their cardiovascular equipment area, 12% indicated that they increased the actual footprint of their clubs. Approximately 3% of clubs indicated that they expanded the size of their usable outdoor space, i.e., outdoor tennis, pools, etc., as opposed to parking. Top five areas of club expansion in 2006: Cardiovascular equipment area Free weight area Child care area Aerobics/dance exercise area Locker rooms Top five areas for future expansion: Cardiovascular equipment area Free weight area Aerobics/dance exercise area Locker rooms Food & beverage Areas of Club Expansion Areas Expanded in 2006 Planned Expansion 2007/2008 Cardiovascular Equipment Area 27% 23% Free Weight Area 16% 20% Child Care Area 14% 12% Aerobics/Dance Exercise Area 13% 16% Locker Rooms 13% 16% Front Desk 12% 13% Resistance Equipment Area 12% 13% Office Space 11% 12% Children s Rec. Area 10% 10% Lounges 10% 10% Food & Beverage 9% 14% Pro Shop 9% 9% Meeting Rooms 9% 11% Physical Therapy/Rehab./ Chiropractic 9% 12% Indoor Pool 5% 5% Gymnasium 3% 2% Indoor Tennis Courts 3% 2% Outdoor Pool 3% 5% Athletic Fields 2% 2% Outdoor Basketball 2% 0% Outdoor Tennis Courts 2% 2% Racquetball Courts 2% 2% Climbing Wall 1% 3% Squash Courts 1% 2% Indoor Track 0% 0% Outdoor Track 0% 0% Note: Percentages do not necessarily reflect an expansion in total square footage, but also include clubs that expanded a given area at the expense of another. 34 IHRSA Profiles of Success 2007

37 CLUB FACILITIES Expansion Club Size (Indoor square footage) Lower 25% Median Upper 25% All Clubs 18,000 50,000 82,500 Multipurpose Clubs 44,375 67, ,000 Fitness-Only Clubs 8,100 17,000 33,000 Less Than 20,000 sq. ft. 5,263 11,250 15,000 20,000 to 34,999 sq. ft. 23,250 27,900 30,000 35,000 to 59,999 sq. ft. 40,000 44,750 50,500 60,000 sq. ft. or More 69,350 90, ,500 Club Size (Outdoor square footage) Lower 25% Median Upper 25% All Clubs 10,500 28,900 72,500 Multipurpose Clubs 13,500 39, ,000 Fitness-Only Clubs 15,905 Less Than 20,000 sq. ft. 1,850 22,500 43,750 20,000 to 34,999 sq. ft. 11,500 35,000 to 59,999 sq. ft. 19,000 28,800 84,950 60,000 sq. ft. or More 21,875 39, ,500 IHRSA Profiles of Success

38 CLUB FACILITIES Most Commonly Offered Facilities Free Weights 85% Group Exercise/Aerobics Studio 73% Pro Shop 64% Sauna 62% Treadmills 62% Elliptical Motion Trainers 60% Stationary Bikes (Recumbent) 60% Stationary Bikes (Upright) 59% Cardiovascular 59% Climbers/Steppers 58% Plate-Loaded Equipment 57% Selectorized Equipment 53% Nursery 48% Rowers 46% Snack/Juice Bar 43% Whirlpool 42% Stretching Equipment 40% Pool-Indoor 39% Steam Room 38% Vending Machines 34% Basketball 34% Racquetball 34% Fitness Center 33% Tanning 33% Variable Resistance 30% Group Cycling Bikes 27% Pool-Outdoor 20% Meeting/Conference Rooms 20% Children Only Section 20% On-site AED 16% Cross Country Ski Machines 15% Gymnasium 14% Squash 14% Indoor Track 14% Women Only Section 13% Tennis-Outdoor 13% Restaurant 12% Bar/Lounge 12% Volleyball-Hard Court 11% Tennis-Indoor 11% Day Spa 8% Volleyball-Sand 8% Outdoor Track 6% Climbing Wall 6% Hair & Beauty Salon 4% Indoor Golf 3% Children s Equipment 3% Fountain Service 3% Men Only Section 3% Golf Course 2% Tennis-Bubbled 1% Note: Data based upon IHRSA member census of 3,331 clubs in Canada & U.S. 36 IHRSA Profiles of Success 2007

39 CLUB FACILITIES Most Commonly Offered Club Programs & Services Personal Training 91% Fitness Evaluation 77% Step/Bench Aerobics 76% Strength Training 74% Yoga 68% Child Care 59% Group Cycling Classes 55% Nutritional Counseling/Classes 53% Weight Management 52% Cardio Kickboxing or Similar 51% Low Impact Aerobics 51% Exercise Prescriptions 49% Corporate Programming 48% Massage 47% High Impact Aerobics 47% Cross Training 45% Kickboxing 40% Group Strength Training 39% Pilates 38% Health Education Programs 37% CPR Training Classes 35% Aquatic Exercise 34% Vitamin/Supplement Sales 32% Towel Service 32% Dance 30% Seniors Programming 30% Summer Camp Programming 29% Boot Camps 29% Competitive Sports 26% Martial Arts 26% Juniors Programming 26% Children s Programming 24% Physical Therapy 22% Boxing 21% Volleyball 19% Social Programs 19% Wellness-Stress Reduction 18% Tai Chi 18% Internet Access For Members 17% Prenatal 17% Wallyball 16% Postnatal 15% Lower Back Programs 15% Racquetball League 13% Basketball League 13% Arthritis Programs 12% Spa Treatments 12% Hospital Affiliation 12% Walking Classes 11% High Blood Pressure Programs 10% Self-Defense 10% Cardiac Rehab 9% Wellness-Smoking Cessation 9% Handicap Programming 8% Diabetes Programs 8% Tennis League 7% Chiropractic Services 7% Osteoporosis Programs 7% Subsidized Memberships 7% Group Running Classes 6% Lateral Motion Trainers 6% Treadmill Classes 5% Gymnastics 5% HMO/Insurance Affiliation 5% Soccer 4% Physician Affiliation 4% Squash League 4% Sell Home Fitness Equipment 2% Group Rowing Classes 2% Note: Data based upon IHRSA member census of 3,331 clubs in Canada and U.S. Racquet Sports Courts (Number of courts in 2006) Mean Median Indoor Tennis Outdoor Tennis Bubbled Tennis Raquetball Squash IHRSA Profiles of Success

40 CLUB FACILITIES Fixed Charges as a Percentage of Total Revenues (means) by Club Type All Clubs Multipurpose Clubs Fitness-Only Clubs Insurance 2.10% 2.20% 1.80% Management Fees 1.40% 1.40% 1.50% Real Estate/Personal Property Taxes 2.40% 2.50% 2.20% Rent-Land & Building 7.80% 6.80% 11.00% Rent-Equipment 0.50% 0.30% 1.10% Total Fixed Charges 14.20% 13.20% 17.60% Fixed Charges as a Percentage of Total Revenues (means) by Club Size Less Than 20,000 sq. ft. 20,000 to 34,999 sq. ft. 35,000 to 59,999 sq. ft. 60,000 sq. ft. or More Insurance 3.00% 2.70% 2.10% 1.70% Management Fees 1.20% 3.30% 0.50% 1.30% Real Estate/Personal Property Taxes 1.60% 2.10% 3.00% 2.50% Rent-Land & Building 13.90% 10.50% 6.00% 6.10% Rent-Equipment 1.80% 0.70% 0.40% 0.30% Total Fixed Charges 21.50% 19.30% 12.00% 11.80% Real Estate Rent per Square Foot Lower 25% Median Upper 25% All Clubs $4.30 $7.60 $10.20 Multipurpose Clubs $4.20 $7.70 $11.40 Fitness-Only Clubs $5.90 $7.10 $9.90 Less Than 20,000 sq. ft. $4.30 $6.60 $ ,000 to 34,999 sq. ft. $ ,000 to 59,999 sq. ft. $ ,000 sq. ft. or More $4.70 $8.70 $ IHRSA Profiles of Success 2007

41 2006 Income Statement, Balance Sheet Data All Clubs Mean Median Middle Range Total Revenue (thousands) $3, S1, , Income Statement as Percent of Revenue Membership Dues & Fees 67.70% Racquet Sports 6.70% Fitness 10.30% Spa 2.60% Health Care 0.50% Pro Shop/Retail Shop 2.30% Food & Beverage 2.50% Children s Programs 3.00% Other Income 4.50% Total Revenue % Operated Departments Expenses Racquet Sports 4.00% Fitness 12.60% Spa 1.80% Health Care 0.30% Pro Shop/Retail Shop 1.80% Food & Beverage 2.00% Children s Programs 2.60% Total Operated Departments Expenses 25.10% Earnings Before Undistributed Operating Expenses 74.90% Undistributed Operating Expenses Member Services 5.60% Sales & Marketing 4.50% Repairs & Maintenance 5.10% Housekeeping 2.90% Utilities 5.60% General & Administrative 15.70% Total Undistributed Operating Expenses 25.10% Earnings Before Fixed Charges 35.60% Note: Data reflects a percentage of total revenues or assets unless indicated otherwise. Category definitions conform to IHRSA s Uniform System of Accounts for the Health, Racquet & Sportsclub Industry. Each mean and median was independently calculated or identified for each individual set or subset of responses to a given question. As a result, component figures on an item may not necessarily total 100% and normal mathematical relationships between items may not always exist. IHRSA Profiles of Success

42 2006 Income Statement, Balance Sheet Data All Clubs (continued) Fixed Charges Mean Median Middle Range Fixed Charges Insurance 2.10% Management Fees 1.40% Real Estate/Personal Property Taxes 2.40% Rent-Land & Building 7.80% Rent-Equipment 0.50% Total Fixed Charges 14.20% Earnings Before Interest, Depreciation and Amortization, and Income Taxes (EBITDA) 21.30% Interest Expense 3.50% Depreciation and Amortization 6.20% Earnings Before Income Taxes (EBIT) 11.70% Income Taxes Current Income Taxes 0.60% Deferred Income Taxes 0.00% Total Income Taxes 0.60% Income After Taxes 11.10% Summary Balance Sheet (% Total Assets) Current Assets 24.60% Non-Current Assets 75.50% Total Assets % Current Liabilities 15.40% Long-Term Debt Net of Current Maturities 46.90% Total Liabilities 62.30% Owner s Equity 37.70% Total Liabilities and Owner s Equity % Liquidity, Financing and Activity/Profitability Ratios Current Ratio Debt-Equity Ratio Interest Coverage Ratio Fixed Assets Turnover 1.2X Return on Owner s Equity 30.30% Return on Fixed Assets 10.40% Return on Total Assets 9.00% IHRSA Profiles of Success 2007

43 2006 Income Statement, Balance Sheet Data Multipurpose Clubs Mean Median Middle Range Total Revenue (thousands) $4, $1, , Income Statement as Percent of Revenue Membership Dues & Fees 65.90% Racquet Sports 8.10% Fitness 10.20% Spa 2.20% Health Care 0.50% Pro Shop/Retail Shop 1.80% Food & Beverage 2.30% Children s Programs 3.70% Other Income 5.20% Total Revenue % Operated Departments Expenses Racquet Sports 4.70% Fitness 12.40% Spa 1.70% Health Care 0.30% Pro Shop/Retail Shop 1.30% Food & Beverage 2.10% Children s Programs 3.00% Total Operated Departments Expenses 25.30% Earnings Before Undistributed Operating Expenses 74.70% Undistributed Operating Expenses Member Services 4.90% Sales & Marketing 4.20% Repairs & Maintenance 5.60% Housekeeping 2.90% Utilities 6.10% General & Administrative 17.50% Total Undistributed Operating Expenses 41.20% Earnings Before Fixed Charges 33.50% Note: Data reflects a percentage of total revenues or assets unless indicated otherwise. Category definitions conform to IHRSA s Uniform System of Accounts for the Health, Racquet & Sportsclub Industry. Each mean and median was independently calculated or identified for each individual set or subset of responses to a given question. As a result, component figures on an item may not necessarily total 100% and normal mathematical relationships between items may not always exist. IHRSA Profiles of Success

44 2006 Income Statement, Balance Sheet Data Multipurpose Clubs (continued) Fixed Charges Mean Median Middle Range Fixed Charges Insurance 2.20% Management Fees 1.40% Real Estate/Personal Property Taxes 2.50% Rent-Land & Building 6.80% Rent-Equipment 0.30% Total Fixed Charges 13.20% Earnings Before Interest, Depreciation and Amortization, and Income Taxes (EBITDA) 20.30% Interest Expense 4.10% Depreciation and Amortization 6.40% Earnings Before Income Taxes (EBIT) 9.80% Income Taxes Current Income Taxes 0.50% Deferred Income Taxes 0.00% Total Income Taxes 0.50% Income After Taxes 9.30% Summary Balance Sheet (% Total Assets) Current Assets 22.30% Non-Current Assets 77.70% Total Assets % Current Liabilities 15.80% Long-Term Debt Net of Current Maturities 47.40% Total Liabilities 63.20% Owner s Equity 36.80% Total Liabilities and Owner s Equity % Liquidity, Financing and Activity/Profitability Ratios Current Ratio Debt-Equity Ratio Interest Coverage Ratio Fixed Assets Turnover 1.1X Return on Owner s Equity 28.70% Return on Fixed Assets 9.50% Return on Total Assets 7.40% IHRSA Profiles of Success 2007

45 2006 Income Statement, Balance Sheet Data Fitness-only Clubs Mean Median Middle Range Total Revenue (thousands) $1, $ , Income Statement as Percent of Revenue Membership Dues & Fees 75.50% Racquet Sports 0.40% Fitness 11.20% Spa 3.70% Health Care 0.50% Pro Shop/Retail Shop 2.00% Food & Beverage 3.10% Children s Programs 1.20% Other Income 2.50% Total Revenue % Operated Departments Expenses Racquet Sports 0.30% Fitness 13.90% Spa 2.50% Health Care 0.30% Pro Shop/Retail Shop 1.60% Food & Beverage 1.80% Children s Programs 1.70% Total Operated Departments Expenses 22.00% Earnings Before Undistributed Operating Expenses 78.00% Undistributed Operating Expenses Member Services 7.60% Sales & Marketing 5.40% Repairs & Maintenance 3.90% Housekeeping 3.20% Utilities 4.20% General & Administrative 11.20% Total Undistributed Operating Expenses 35.60% Earnings Before Fixed Charges 42.50% Note: Data reflects a percentage of total revenues or assets unless indicated otherwise. Category definitions conform to IHRSA s Uniform System of Accounts for the Health, Racquet & Sportsclub Industry. Each mean and median was independently calculated or identified for each individual set or subset of responses to a given question. As a result, component figures on an item may not necessarily total 100% and normal mathematical relationships between items may not always exist. IHRSA Profiles of Success

46 2006 Income Statement, Balance Sheet Data Fitness-only Clubs (continued) Fixed Charges Mean Median Middle Range Fixed Charges Insurance 1.80% Management Fees 1.50% Real Estate/Personal Property Taxes 2.20% Rent-Land & Building 11.00% Rent-Equipment 1.10% Total Fixed Charges 17.60% Earnings Before Interest, Depreciation and Amortization, and Income Taxes (EBITDA) 24.90% Interest Expense 1.90% Depreciation and Amortization 5.90% Earnings Before Income Taxes (EBIT) 17.10% Income Taxes Current Income Taxes 0.70% Deferred Income Taxes 0.00% Total Income Taxes 0.70% Income After Taxes 16.40% Summary Balance Sheet (% Total Assets) Current Assets 30.90% Non-Current Assets 69.10% Total Assets % Current Liabilities 14.40% Long-Term Debt Net of Current Maturities 47.70% Total Liabilities 62.20% Owner s Equity 37.80% Total Liabilities and Owner s Equity % Liquidity, Financing and Activity/Profitability Ratios Current Ratio Debt-Equity Ratio Interest Coverage Ratio Fixed Assets Turnover 1.5X Return on Owner s Equity 40.70% Return on Fixed Assets 18.90% Return on Total Assets 16.10% IHRSA Profiles of Success 2007

47 2006 Income Statement, Balance Sheet Data Part of a Chain or Multi-club Group Mean Median Middle Range Total Revenue (thousands) $5, $3, , Income Statement as Percent of Revenue Membership Dues & Fees 64.90% Racquet Sports 7.40% Fitness 10.60% Spa 3.20% Health Care 0.70% Pro Shop/Retail Shop 2.00% Food & Beverage 2.40% Children s Programs 3.90% Other Income 4.90% Total Revenue % Operated Departments Expenses Racquet Sports 3.70% Fitness 13.20% Spa 2.50% Health Care 0.40% Pro Shop/Retail Shop 1.40% Food & Beverage 2.00% Children s Programs 3.70% Total Operated Departments Expenses 26.90% Earnings Before Undistributed Operating Expenses 73.20% Undistributed Operating Expenses Member Services 5.10% Sales & Marketing 4.60% Repairs & Maintenance 4.10% Housekeeping 2.90% Utilities 5.40% General & Administrative 15.40% Total Undistributed Operating Expenses 37.40% Earnings Before Fixed Charges 35.70% Note: Data reflects a percentage of total revenues or assets unless indicated otherwise. Category definitions conform to IHRSA s Uniform System of Accounts for the Health, Racquet & Sportsclub Industry. Each mean and median was independently calculated or identified for each individual set or subset of responses to a given question. As a result, component figures on an item may not necessarily total 100% and normal mathematical relationships between items may not always exist. IHRSA Profiles of Success

48 2006 Income Statement, Balance Sheet Data Part of a Chain or Multi-club Group (continued) Fixed Charges Mean Median Middle Range Fixed Charges Insurance 1.90% Management Fees 1.30% Real Estate/Personal Property Taxes 2.60% Rent-Land & Building 9.00% Rent-Equipment 0.40% Total Fixed Charges 15.30% Earnings Before Interest, Depreciation and Amortization, and Income Taxes (EBITDA) 20.40% Interest Expense 3.20% Depreciation and Amortization 5.30% Earnings Before Income Taxes (EBIT) 11.90% Income Taxes Current Income Taxes 0.70% Deferred Income Taxes 0.00% Total Income Taxes 0.70% Income After Taxes 11.20% Summary Balance Sheet (% Total Assets) Current Assets 22.80% Non-Current Assets 77.20% Total Assets % Current Liabilities 15.00% Long-Term Debt Net of Current Maturities 46.60% Total Liabilities 61.70% Owner s Equity 38.30% Total Liabilities and Owner s Equity % Liquidity, Financing and Activity/Profitability Ratios Current Ratio Debt-Equity Ratio Interest Coverage Ratio Fixed Assets Turnover 1.2X Return on Owner s Equity 26.70% Return on Fixed Assets 10.20% Return on Total Assets 8.80% IHRSA Profiles of Success 2007

49 2006 Income Statement, Balance Sheet Data Not Part of a Chain or Multi-club Group Mean Median Middle Range Total Revenue (thousands) $1, $ , Income Statement as Percent of Revenue Membership Dues & Fees 70.40% Racquet Sports 6.00% Fitness 10.00% Spa 1.90% Health Care 0.30% Pro Shop/Retail Shop 2.60% Food & Beverage 2.60% Children s Programs 2.10% Other Income 4.00% Total Revenue % Operated Departments Expenses Racquet Sports 4.40% Fitness 12.00% Spa 1.20% Health Care 0.20% Pro Shop/Retail Shop 2.20% Food & Beverage 2.00% Children s Programs 1.50% Total Operated Departments Expenses 23.40% Earnings Before Undistributed Operating Expenses 76.60% Undistributed Operating Expenses Member Services 6.10% Sales & Marketing 4.40% Repairs & Maintenance 6.10% Housekeeping 3.00% Utilities 5.80% General & Administrative 15.90% Total Undistributed Operating Expenses 41.20% Earnings Before Fixed Charges 35.40% Note: Data reflects a percentage of total revenues or assets unless indicated otherwise. Category definitions conform to IHRSA s Uniform System of Accounts for the Health, Racquet & Sportsclub Industry. Each mean and median was independently calculated or identified for each individual set or subset of responses to a given question. As a result, component figures on an item may not necessarily total 100% and normal mathematical relationships between items may not always exist. IHRSA Profiles of Success

50 2006 Income Statement, Balance Sheet Data Not Part of a Chain or Multi-club Group (continued) Fixed Charges Mean Median Middle Range Fixed Charges Insurance 2.20% Management Fees 1.50% Real Estate/Personal Property Taxes 2.20% Rent-Land & Building 6.60% Rent-Equipment 0.70% Total Fixed Charges 13.10% Earnings Before Interest, Depreciation and Amortization, and Income Taxes (EBITDA) 22.30% Interest Expense 3.70% Depreciation and Amortization 7.10% Earnings Before Income Taxes (EBIT) 11.50% Income Taxes Current Income Taxes 0.50% Deferred Income Taxes 0.00% Total Income Taxes 0.50% Income After Taxes 11.00% Summary Balance Sheet (% Total Assets) Current Assets 26.50% Non-Current Assets 73.50% Total Assets % Current Liabilities 15.90% Long-Term Debt Net of Current Maturities 47.20% Total Liabilities 63.00% Owner s Equity 37.00% Total Liabilities and Owner s Equity % Liquidity, Financing and Activity/Profitability Ratios Current Ratio Debt-Equity Ratio Interest Coverage Ratio Fixed Assets Turnover 1.0X Return on Owner s Equity 35.50% Return on Fixed Assets 13.00% Return on Total Assets 11.60% IHRSA Profiles of Success 2007

51 2006 Income Statement, Balance Sheet Data Clubs with Less than 20,000 sq. ft. Mean Median Middle Range Total Revenue (thousands) $ $ , Income Statement as Percent of Revenue Membership Dues & Fees 82.20% Racquet Sports 1.40% Fitness 8.50% Spa 0.70% Health Care 0.00% Pro Shop/Retail Shop 1.60% Food & Beverage 3.90% Children s Programs 0.30% Other Income 1.40% Total Revenue % Operated Departments Expenses Racquet Sports 1.30% Fitness 11.30% Spa 0.40% Health Care 0.00% Pro Shop/Retail Shop 1.00% Food & Beverage 1.90% Children s Programs 0.70% Total Operated Departments Expenses 16.60% Earnings Before Undistributed Operating Expenses 83.40% Undistributed Operating Expenses Member Services 7.10% Sales & Marketing 5.60% Repairs & Maintenance 3.70% Housekeeping 2.00% Utilities 4.80% General & Administrative 11.90% Total Undistributed Operating Expenses 35.00% Earnings Before Fixed Charges 48.40% Note: Data reflects a percentage of total revenues or assets unless indicated otherwise. Category definitions conform to IHRSA s Uniform System of Accounts for the Health, Racquet & Sportsclub Industry. Each mean and median was independently calculated or identified for each individual set or subset of responses to a given question. As a result, component figures on an item may not necessarily total 100% and normal mathematical relationships between items may not always exist. IHRSA Profiles of Success

52 2006 Income Statement, Balance Sheet Data Clubs with Less than 20,000 sq. ft. (continued) Fixed Charges Mean Median Middle Range Fixed Charges Insurance 3.00% Management Fees 1.20% Real Estate/Personal Property Taxes 1.60% Rent-Land & Building 13.90% Rent-Equipment 1.80% Total Fixed Charges 21.50% Earnings Before Interest, Depreciation and Amortization, and Income Taxes (EBITDA) 26.90% Interest Expense 2.70% Depreciation and Amortization 7.60% Earnings Before Income Taxes (EBIT) 16.60% Income Taxes Current Income Taxes 1.10% Deferred Income Taxes 0.00% Total Income Taxes 1.10% Income After Taxes 15.60% Summary Balance Sheet (% Total Assets) Current Assets 28.30% Non-Current Assets 71.70% Total Assets % Current Liabilities 17.60% Long-Term Debt Net of Current Maturities 44.40% Total Liabilities 61.90% Owner s Equity 38.10% Total Liabilities and Owner s Equity % Liquidity, Financing and Activity/Profitability Ratios Current Ratio Debt-Equity Ratio Interest Coverage Ratio 6.5 N/A N/A Fixed Assets Turnover 2.6X Return on Owner s Equity 45.90% Return on Fixed Assets 17.20% Return on Total Assets 14.60% IHRSA Profiles of Success 2007

53 2006 Income Statement, Balance Sheet Data Clubs Between 20,000 and 34,999 sq. ft. Mean Median Middle Range Total Revenue (thousands) $1, $1, , Income Statement as Percent of Revenue Membership Dues & Fees 75.40% Racquet Sports 0.00% Fitness 10.10% Spa 5.30% Health Care 0.30% Pro Shop/Retail Shop 1.30% Food & Beverage 1.90% Children s Programs 1.50% Other Income 4.30% Total Revenue % Operated Departments Expenses Racquet Sports 0.10% Fitness 13.30% Spa 3.90% Health Care 0.00% Pro Shop/Retail Shop 1.00% Food & Beverage 2.20% Children s Programs 2.10% Total Operated Departments Expenses 22.50% Earnings Before Undistributed Operating Expenses 77.50% Undistributed Operating Expenses Member Services 3.50% Sales & Marketing 5.20% Repairs & Maintenance 4.50% Housekeeping 2.70% Utilities 6.20% General & Administrative 15.00% Total Undistributed Operating Expenses 37.10% Earnings Before Fixed Charges 40.40% Note: Data reflects a percentage of total revenues or assets unless indicated otherwise. Category definitions conform to IHRSA s Uniform System of Accounts for the Health, Racquet & Sportsclub Industry. Each mean and median was independently calculated or identified for each individual set or subset of responses to a given question. As a result, component figures on an item may not necessarily total 100% and normal mathematical relationships between items may not always exist. IHRSA Profiles of Success

54 2006 Income Statement, Balance Sheet Data Clubs Between 20,000 and 34,999 sq. ft. (continued) Fixed Charges Mean Median Middle Range Fixed Charges Insurance 2.70% Management Fees 3.30% Real Estate/Personal Property Taxes 2.10% Rent-Land & Building 10.50% Rent-Equipment 0.70% Total Fixed Charges 19.30% Earnings Before Interest, Depreciation and Amortization, and Income Taxes (EBITDA) 21.10% Interest Expense 2.50% Depreciation and Amortization 5.60% Earnings Before Income Taxes (EBIT) 13.00% Income Taxes Current Income Taxes 0.50% Deferred Income Taxes 0.00% Total Income Taxes 0.50% Income After Taxes 12.50% Summary Balance Sheet (% Total Assets) Current Assets 34.30% Non-Current Assets 65.70% Total Assets % Current Liabilities 24.80% Long-Term Debt Net of Current Maturities 46.50% Total Liabilities 71.30% Owner s Equity 28.80% Total Liabilities and Owner s Equity % Liquidity, Financing and Activity/Profitability Ratios Current Ratio Debt-Equity Ratio Interest Coverage Ratio 3.8 N/A N/A Fixed Assets Turnover 2.1X Return on Owner s Equity 65.60% Return on Fixed Assets 18.80% Return on Total Assets 6.90% IHRSA Profiles of Success 2007

55 2006 Income Statement, Balance Sheet Data Clubs Between 35,000 and 59,999 sq. ft. Mean Median Middle Range Total Revenue (thousands) $2, $1, , Income Statement as Percent of Revenue Membership Dues & Fees 71.30% Racquet Sports 7.30% Fitness 9.20% Spa 0.60% Health Care 0.20% Pro Shop/Retail Shop 2.50% Food & Beverage 1.10% Children s Programs 4.40% Other Income 3.50% Total Revenue % Operated Departments Expenses Racquet Sports 4.80% Fitness 10.80% Spa 0.40% Health Care 0.00% Pro Shop/Retail Shop 1.70% Food & Beverage 0.90% Children s Programs 1.90% Total Operated Departments Expenses 20.40% Earnings Before Undistributed Operating Expenses 79.70% Undistributed Operating Expenses Member Services 6.10% Sales & Marketing 5.10% Repairs & Maintenance 7.90% Housekeeping 1.30% Utilities 6.40% General & Administrative 17.80% Total Undistributed Operating Expenses 44.40% Earnings Before Fixed Charges 35.20% Note: Data reflects a percentage of total revenues or assets unless indicated otherwise. Category definitions conform to IHRSA s Uniform System of Accounts for the Health, Racquet & Sportsclub Industry. Each mean and median was independently calculated or identified for each individual set or subset of responses to a given question. As a result, component figures on an item may not necessarily total 100% and normal mathematical relationships between items may not always exist. IHRSA Profiles of Success

56 2006 Income Statement, Balance Sheet Data Clubs Between 35,000 and 59,999 sq. ft. (continued) Fixed Charges Mean Median Middle Range Fixed Charges Insurance 2.10% Management Fees 0.50% Real Estate/Personal Property Taxes 3.00% Rent-Land & Building 6.00% Rent-Equipment 0.40% Total Fixed Charges 12.00% Earnings Before Interest, Depreciation and Amortization, and Income Taxes (EBITDA) 23.20% Interest Expense 3.90% Depreciation and Amortization 5.40% Earnings Before Income Taxes (EBIT) 14.00% Income Taxes Current Income Taxes 0.20% Deferred Income Taxes 0.00% Total Income Taxes 0.20% Income After Taxes 13.80% Summary Balance Sheet (% Total Assets) Current Assets 31.30% Non-Current Assets 68.80% Total Assets % Current Liabilities 13.70% Long-Term Debt Net of Current Maturities 60.20% Total Liabilities 73.80% Owner s Equity 26.20% Total Liabilities and Owner s Equity % Liquidity, Financing and Activity/Profitability Ratios Current Ratio Debt-Equity Ratio Interest Coverage Ratio Fixed Assets Turnover 1.2X Return on Owner s Equity 31.50% Return on Fixed Assets 9.90% Return on Total Assets 9.20% IHRSA Profiles of Success 2007

57 2006 Income Statement, Balance Sheet Data Clubs With 60,000 sq. ft. or More Mean Median Middle Range Total Revenue (thousands) $6, $4, , Income Statement as Percent of Revenue Membership Dues & Fees 61.10% Racquet Sports 8.60% Fitness 11.40% Spa 3.30% Health Care 0.80% Pro Shop/Retail Shop 2.70% Food & Beverage 2.80% Children s Programs 3.50% Other Income 5.90% Total Revenue % Operated Departments Expenses Racquet Sports 5.20% Fitness 13.80% Spa 2.40% Health Care 0.50% Pro Shop/Retail Shop 2.20% Food & Beverage 2.40% Children s Programs 3.50% Total Operated Departments Expenses 30.20% Earnings Before Undistributed Operating Expenses 69.80% Undistributed Operating Expenses Member Services 4.40% Sales & Marketing 4.00% Repairs & Maintenance 4.70% Housekeeping 3.70% Utilities 5.40% General & Administrative 16.20% Total Undistributed Operating Expenses 38.40% Earnings Before Fixed Charges 31.50% Note: Data reflects a percentage of total revenues or assets unless indicated otherwise. Category definitions conform to IHRSA s Uniform System of Accounts for the Health, Racquet & Sportsclub Industry. Each mean and median was independently calculated or identified for each individual set or subset of responses to a given question. As a result, component figures on an item may not necessarily total 100% and normal mathematical relationships between items may not always exist. IHRSA Profiles of Success

58 2006 Income Statement, Balance Sheet Data Clubs With 60,000 sq. ft. or More (continued) Fixed Charges Mean Median Middle Range Fixed Charges Insurance 1.70% Management Fees 1.30% Real Estate/Personal Property Taxes 2.50% Rent-Land & Building 6.10% Rent-Equipment 0.30% Total Fixed Charges 11.80% Earnings Before Interest, Depreciation and Amortization, and Income Taxes (EBITDA) 19.60% Interest Expense 3.60% Depreciation and Amortization 6.40% Earnings Before Income Taxes (EBIT) 9.60% Income Taxes Current Income Taxes 0.60% Deferred Income Taxes 0.00% Total Income Taxes 0.60% Income After Taxes 9.10% Summary Balance Sheet (% Total Assets) Current Assets 19.80% Non-Current Assets 80.20% Total Assets % Current Liabilities 13.70% Long-Term Debt Net of Current Maturities 42.60% Total Liabilities 56.30% Owner s Equity 43.70% Total Liabilities and Owner s Equity % Liquidity, Financing and Activity/Profitability Ratios Current Ratio Debt-Equity Ratio Interest Coverage Ratio Fixed Assets Turnover 1.1X Return on Owner s Equity 22.70% Return on Fixed Assets 11.00% Return on Total Assets 7.70% IHRSA Profiles of Success 2007

59 Sponsored by Second edition ADDITIONAL IHRSA PUBLICATIONS The 2007 IHRSA Global Report The IHRSA 2007 Global Report is the most comprehensive overview of the worldwide health and fitness industry available anywhere. The 2007 Global Report has the most upto-date global industry statistics such as: the number of clubs in 2007 increased by 6% and now totals more than 98,000 facilities worldwide! Industry leaders representing all corners of the globe and all facets of the industry comment on the challenges and opportunities facing the industry. The Global Report contains a directory of the major club companies worldwide, including financial information where available. The 2007 IHRSA European Market Report The 2007 IHRSA European Market Report, produced in conjunction with Deloitte and sponsored by Matrix Fitness Systems/Johnson Health Tech, is the most comprehensive and authoritative source of data available on the European fitness market; a great tool for researchers, banks, investors, governments, insurance companies, club owners, and suppliers. The report includes interview results from 6,000 consumers in six key countries, conducted by world famous GfK research. Additional topics include: market growth projections, mergers and acquisitions, a special report on the Russian market, corporate tax rates, VAT, market penetration statistics, and a report on the fitness labor market and salary structures. NEW IN 2007! IHRSA s Guide to Membership Retention: Industry Lessons on What and What Not to Do Authored by John McCarthy, IHRSA s former executive director, this publication assembles what the industry has learned about membership retention over the last 25 years and specifies a comprehensive list of tactical measures that can make a difference in decreasing membership attrition. Sponsored by Technogym, The Wellness Company, this valuable guide explains the impact of attrition on a club s bottom line, outlines the characteristics of high-retention clubs and includes case studies of clubs with above-average member retention rates. New in this edition: A thought-provoking introduction by John McCarthy, the latest industry statistics, and four real-life case studies of IHRSA clubs with successful retention programs. IHRSA S GUIDE TO 2007 MEMBERSHIP RETENTION By John McCarthy Industry Lessons on what and what not to do IHRSA s Professional Development and Management DVD Series The first IHRSA series for Professional Development and Management focuses on sales. These 4 DVDs cover the most crucial topics that every health professional should know about sales. Each DVD is 60+ minutes and is lead by an expert in the particular health club topic. Also, staff from successful clubs are interviewed on their best practices. The Sales Series include: Managing the Sales Team & Process Selling Club Services to Corporations Non-Sales Professional s Guide to Selling Club Services & Products Selling Club Memberships To order visit